One Thriving Sector: The Business of War

South Nashua, N.H. – Across the nation, companies are lopping off hundreds of thousands of jobs, retailers are shuttering stores, and automakers are tottering on the edge of bankruptcy.

But here in the Merrimack RiverValley, and over the state line at several industrial sites around Massachusetts, defense [sic] contractor BAE Systems is hoisting "Help Wanted" signs.

BAE develops technology in fields like electronic warfare and cybersecurity, sophisticated systems that are key to combating a new wave of threats around the globe. At a time when 1.7 million jobs have been lost in the United States this year, the company is hiring 200 engineers and manufacturing workers in Nashua, Hudson, and Merrimack, N.H., and Burlington, Lexington, and Marlborough, Mass.

Other defense [sic] electronics contractors, such as Waltham’s Raytheon Co. and General Dynamics Corp.’s communications systems center in Taunton, also continue to ramp up. Such companies remain awash in orders from the Pentagon and American allies increasingly worried about terrorism and missile proliferation. They are also facing the pending retirement of many baby boomers in their labor force, a factor lending greater urgency to their hiring efforts.

"We’re acting very aggressively when we find a good match," said Christopher Sherman, engineering manager at BAE’s Electronics & Integrated Solutions division here.

The company has already hired 475 people in New Hampshire and Massachusetts this year, mostly to meet growing demand, but in some cases, to replace departing workers.

Back-to-back BAE job fairs Tuesday and Wednesday drew 1,462 candidates, including recent college graduates in pressed suits, Cold War-era defense [sic] industry veterans with salt-and-pepper hair, and commercial engineers who had previously worked at computer software or telecommunications companies. All hoped to land jobs at BAE’s electronics programs, some of which are highly classified.

"I’ve challenged my team to hire 70 people out of this crowd tonight," said Amanda Arria, the company’s Northeast regional talent acquisition manager, pointing to lines of applicants waiting to meet with hiring managers in the BAE cafeteria Tuesday night.

Patricia Heckley, 50, a software engineer from nearby Tyngsborough, Mass., stood in one of the lines. Heckley said she had never worked in the defense [sic] industry, but was confident her skills were transferable in a period when high-tech companies are scaling back. "It’s a jump, but I think it’s a reachable jump," she said.

Hunting for his first job was Curtis Jerry, 22, of Sanbornton, N.H., who graduated from Worcester Polytechnic Institute earlier this year. "I love defense [sic] in general, because that’s where all the interesting technology is now," Jerry said. "I’d really like to work testing guidance and navigation systems, but I’d do just about anything."

BAE and other military contractors have become islands of growth in a national job market that is underwater.

The growth in defense [sic] may not continue for long. Industry analysts are projecting budget cuts in major US weapons programs as the war in Iraq winds down and the incoming administration of President-elect Barack Obama wrestles with other priorities. Defense [sic] spending has climbed steadily during the Bush administration, reaching $671.7 billion in the 2008 fiscal year, including emergency supplemental appropriations for the wars in Iraq and Afghanistan. That represents a 72 percent increase from fiscal 2000, after adjusting for inflation.

But the budget reductions are not likely to start until next fall, when President Obama’s national security team will be in place and the next federal budget year begins, suggested Loren B. Thompson, chief operating officer at the Lexington Institute, an Arlington, Va., think tank.

"There will be breathing space because of the rhythm of the budget cycle," Thompson said.

"And even when the cuts come, some companies, because of what they do or because of emerging threats, will fare pretty well. Companies in Massachusetts and New Hampshire will weather the downturn better than others are likely to."

One reason is that, rather than building entire jets, ships, tanks, or ground installations, many of the region’s defense [sic] firms develop the electronics, combat, and communications systems they use. Even when a massive weapons program is cut back, as the Navy’s $20 billion DDG 1000 destroyer program was last summer, contractors like Raytheon can market their combat systems for use in other new ships or in older vessels in the Navy fleet.

Area contractors, for instance, work on electronic eavesdropping, signal processing for radar systems, and equipment used to integrate intelligence from different sources, technologies critical to helping the US military and allies battle terrorists in multiple countries. General Dynamics, at its Taunton site, is developing a new generation of command, control, and communications systems that enable the Army to coordinate simultaneous operations at far-flung locations.

The economic downturn has given defense [sic] contractors a boost by expanding the pool of potential employees, since workers from civilian industries have lost jobs due to cutbacks.

But the ongoing housing slump has made it difficult for workers from other states to sell their homes and move to New England, forcing contractors here to compete with one another for local talent.

"To move people right now is problematic," said Keith J. Peden, senior vice president of human resources at Raytheon headquarters. "That makes the universe we recruit from smaller."

Raytheon, which is sitting on a $37 billion order backlog, has added more than 200 jobs so far this year at more than a dozen sites in Massachusetts, from Tewksbury to Marlborough. The company projects that it could add another 400 jobs in 2009, in programs ranging from border security and training systems to radar and Patriot missiles.

Over the past year, US allies such as Kuwait, Taiwan, South Korea, and Japan, jittery over the missile threat from Iran and North Korea, have placed orders for Raytheon’s antimissile Patriot weapon systems.